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This article begins by surveying some macro-level evidence of the importance of banks for start-up activity. Then, because household financial decisions are intertwined with entrepreneurial financing decisions, the article provides a framework for delineating different types of entrepreneurial financing decisions. After this it considers evidence gleaned from the Panel Study of Entrepreneurial Dynamics, a multiwave panel of nascent entrepreneurs and the businesses they start. Evidence from the Kauffman Firm Survey, a multiwave panel of firms that were started in 2004, follows. The remainder of the article considers additional sources of evidence and concludes with a discussion of the policy relevance of the importance of debt.

David Robinson is a professor of finance at Duke University's Fuqua School of Business. He is also a faculty research associate in the National Bureau of Economic Research's Productivity Program. He graduated from the London School of Economics with a master degree in economics, and earned MBA and PhD degrees from the University of Chicago. He has published numerous scholarly articles in top finance and economics journals. His research interests include empirical corporate finance, entrepreneurship, venture capital, and private equity.

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